Correlation Between Golden Minerals and International Tower
Can any of the company-specific risk be diversified away by investing in both Golden Minerals and International Tower at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Golden Minerals and International Tower into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Golden Minerals and International Tower Hill, you can compare the effects of market volatilities on Golden Minerals and International Tower and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Golden Minerals with a short position of International Tower. Check out your portfolio center. Please also check ongoing floating volatility patterns of Golden Minerals and International Tower.
Diversification Opportunities for Golden Minerals and International Tower
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Golden and International is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Golden Minerals and International Tower Hill in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Tower Hill and Golden Minerals is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Golden Minerals are associated (or correlated) with International Tower. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Tower Hill has no effect on the direction of Golden Minerals i.e., Golden Minerals and International Tower go up and down completely randomly.
Pair Corralation between Golden Minerals and International Tower
Given the investment horizon of 90 days Golden Minerals is expected to under-perform the International Tower. But the stock apears to be less risky and, when comparing its historical volatility, Golden Minerals is 1.15 times less risky than International Tower. The stock trades about -0.2 of its potential returns per unit of risk. The International Tower Hill is currently generating about -0.17 of returns per unit of risk over similar time horizon. If you would invest 59.00 in International Tower Hill on August 28, 2024 and sell it today you would lose (13.00) from holding International Tower Hill or give up 22.03% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Golden Minerals vs. International Tower Hill
Performance |
| Timeline |
| Golden Minerals |
| International Tower Hill |
Golden Minerals and International Tower Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Golden Minerals and International Tower
The main advantage of trading using opposite Golden Minerals and International Tower positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Golden Minerals position performs unexpectedly, International Tower can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in International Tower will offset losses from the drop in International Tower's long position.| Golden Minerals vs. Summa Silver Corp | Golden Minerals vs. GoGold Resources | Golden Minerals vs. Scottie Resources Corp | Golden Minerals vs. Brixton Metals |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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